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Mexico project reveals Bank planning, supervision failings

15 December 1998

A detailed paper by Trasparencia traces the history and execution of the Mexican Rainfed Areas Development Project. This project, appraised in 1993, was designed to mitigate some of the effects on Mexican small farmers of the country’s entry into the North American Free Trade Area (NAFTA) which was expected to rapidly lower prices of corn and beans. The Project’s execution was delayed by the peso crash of 1994 and the government’s failure to put up counterpart funds. It will end this month.

Based on detailed interviews and statistics collected over four years, Naomi Adelson, the report’s author, points out that for many states where the project is taking place data on the beneficiaries is not comprehensive or not available at all. Where data is present it is clear that:

the main beneficiaries were not the farmers with an average holding of four hectares that the Bank wanted to target;

the high contributions requested from farmers to benefit from the project has excluded many of the poorest;

private property owners rather than common property (ejido) holders benefited most in the areas where good statistics are available;

the crop-production supported was not the principal rainfed food crops intended, but sugar cane, tomatoes, alfalfa and grass and corn for animal consumption;

state governors were allowed wide discretion in fund allocation, thus reinforcing corporatist structures and the political use of public monies. In Chiapas the governor only allocated funds to the pastures establishment component, not to the irrigation or milk production ones, reinforcing long-standing tension between the corn producers and cattle ranchers;

Interviews with a wide variety of farmers’ organisations revealed that the Mexican implementing agency FIRCO was respected for its approach and technical ability. But implementing officials knew little of the World Bank’s norms on participation and admitted that they merely rolled World Bank money into their existing projects which had little or no anti-poverty targeting. As potential beneficiaries were not informed that they were to be recipients of World Bank money, and many key documents were withheld rainfed producers had little bargaining power when FIRCO reallocated Bank funds to projects which did not benefit them.

As the compensatory programmes for poor agricultural producers have not materialised there have been significant protests from farmers in six states.

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The Bretton Woods Project is a UK-based NGO that challenges the World Bank and IMF and promotes alternative approaches. We serve as an information provider, watchdog, networker and advocate. Our flagship publications are the Bretton Woods Observer, a quarterly critical review of developments at the World Bank and IMF, and the Bretton Woods Bulletin, an online update of news and action on the institutions.